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Councils losing £6.7m in Universal Credit arrears
Universal Credit rent arrears have reached £6.7m, representing 10% of total unpaid council rent despite roll-out to only 2.6% of tenants nationally.
A new survey from the National Federation of Arm’s-Length Management Organisations (NFA) and the Association of Retained Council Housing (ARCH) has revealed the total shortfall in rent from tenants claiming Universal Credit is £6.68m.
That represents a significant chunk of the £68.5m total value of council rent arrears from landlords surveyed, despite Universal Credit claimants only making up 2.6% of tenants.
The Department for Work and Pensions (DWP) is set to scale up the roll-out of Universal Credit across new areas this autumn.
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A report accompanying the survey, titled Pause for Thought, said this ambition should be stopped or slowed “to prevent further distress and financial hardship to many families, as well as unprecedented levels of rent arrears and demand for support from landlords”.
Almost three-quarters of Universal Credit claimants – or 73% – were in arrears, owing an average of £772.21, up from £611.73 a year earlier.
The study, which is based on responses from 42 landlords managing 563,985 homes, also found that 40% of Universal Credit claimants in arrears had been keeping up with rent before transitioning to the new system.
Of all tenants, 31% were in rent arrears, falling behind by an average of £414.40. London had the highest proportion of tenants in arrears at 42%, and those living in the capital also owed the most on average at £533.
Eamon McGoldrick, managing director of the NFA, said the organisation’s members “are supportive of the principles of Universal Credit” but that the roll-out should be halted “until the system works properly for both claimants and landlords”.
The NFA and ARCH are calling for the government to set up a transition funding pot to help landlords manage the transition.
“If the level of intensive support needed for vulnerable tenants is to be sustained during the planned roll-out, additional resources are essential,” said John Bibby, chief executive of ARCH.
“Without this, increasing numbers of vulnerable households will drop through the net.”
The organisations are also calling for the seven-day waiting period on new Universal Credit claims to be removed.
A spokesperson for the DWP said: “This report clearly states the majority of tenants in rent arrears were already behind on their rent before moving onto the new system, so it is misleading to link rent arrears to Universal Credit.
“We are rolling out Universal Credit in a gradual, safe and secure way, and the majority of people are managing their budgets well.
“In the rare cases where issues arise, we work closely with local authorities and landlords to provide extra support to people who need it.”
